Two Years That Changed the World

(Part II of a series. Part I was "The Good Old Days.")The 2009 federal deficit was $1.413 trillion dollars, the largest in history. In fact, it was triple the 2008 deficit, which was the largest in history up until then. Even as a fraction of GDP, it was the largest ever in peacetime. What caused such a deficit? Was it tax cuts? Was it war? Was it bailouts? How, exactly, did Bush pull it off?The tricky part about answering such questions is that all we know is what happened. We do not know what would have happened had we done something different. So we have to guess. That is, if you blame a tax cut, you have to guess what federal revenue would have been without that tax cut. Then the difference between that guess and the actual revenue is what you blame on the tax cut.Key word: guess.Bush-bashers like to guess (figure below). They like to guess, for example, that revenues would have been larger than they'd ever been in history as a fraction of GDP if Bush hadn't cut the top...(Read Full Article)

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